Membership of the Customs Union of Russia, Belarus and Kazakhstan may put Armenia at odds with the World Trade Organization (WTO), a senior Armenian government official acknowledged on Tuesday.

Armenia undertook not to raise its import duties above a certain level when it joined the WTO in 2003 following lengthy negotiations with the global structure promoting free trade. It will now have to switch to a more protectionist policy pursued by the Customs Union. Many of the common tariffs enforced by the members of the Russian-led trade bloc fall foul of WTO rules.

Deputy Economy Minister Garegin Melkonian said the Armenian government is mindful of a potential dispute with the WTO and plans to negotiate with the organization after completing its accession talks with the Customs Union this spring. Melkonian insisted that Armenian membership of the WTO will not be at serious risk. But he admitted that some WTO member states could take retaliatory measures against Yerevan in the form of much higher import duties.

“That’s possible,” Melkonian told a news conference. “But the whole point of negotiations is to reach agreement on contentious issues.”

The membership talks with the Customs Union are scheduled to formally start next month. They will focus on sweeping trade preferences sought by Yerevan. The latter hopes that as many as 850 types of goods imported to Armenia will be exempted from considerably higher duties applied by the Russia, Belarus and Kazakhstan.

Melkonian seemed to suggest that the discussions with the union’s governing body, the Eurasian Economic Commission, will not necessarily be smooth. “At some point after the start of our negotiations with the Eurasian Economic Commission, the Customs Union’s individual member states -- Kazakhstan, Belarus and Russia -- will also get involved,” he said. “Each country will be looking at things through the prism of its interests. We will be looking to protect our economic interests.”

“That is why we have drawn up the list [of 850 items.] I don’t exclude that some of those countries will have different positions on that list,” added the official.

President Serzh Sarkisian expressed confidence last week that membership of the Customs Union will not significantly push up consumer price inflation in Armenia. Economy Minister Vahram Avanesian estimated earlier that it will add only up to 1.5 percentage points to annual inflation. Independent economists and some businesspeople have warned of much steeper price hikes, however.